Unacademy to be Acquired by upGrad in a Landmark Deal

In a significant development in the Indian edtech landscape, Unacademy, once a top player in the industry, is on the brink of being acquired by upGrad in a deal that involves an all-stock transaction. This move will bring together two major online learning platforms in the country.

The announcement of this acquisition was made by Unacademy’s co-founder and CEO, Gaurav Munjal, in a post on X. According to Munjal, the companies have signed a term sheet for upGrad to acquire Unacademy in a 100% share-swap deal. The valuation of this deal will be disclosed only after the transaction is finalized. This development follows Munjal’s earlier statement that Unacademy’s valuation had plummeted to below $500 million, a steep decline from its peak of $3.5 billion during the pandemic in 2021.

The edtech sector in India, which witnessed a rapid growth phase during the pandemic, has faced challenges post-lockdown as students returned to physical classrooms, leading to a decreased demand for online learning platforms. Companies like Unacademy have been compelled to cut costs, scale back offline operations, and refocus on their digital offerings.

In a separate communication, upGrad’s co-founder Ronnie Screwvala confirmed that Gaurav Munjal will continue to lead Unacademy post-acquisition. He highlighted that this union will bolster upGrad’s integrated model encompassing K-12 education, upskilling, and lifelong learning. Both companies have agreed on an undisclosed break fee in case the deal falls through.

Reflecting on Unacademy’s journey, Munjal acknowledged the company’s pivotal role in revolutionizing the edtech sector. However, he also admitted that there was a period of lost focus and market share, with a lack of significant product innovation in recent times.

Established in 2015, Unacademy emerged as a prominent player in the Indian edtech scene during the pandemic-induced surge in online learning. As the demand subsided post-lockdown, the company undertook cost-cutting measures, workforce reductions, and business restructuring.

Munjal revealed that Unacademy currently holds over $100 million in cash reserves, achieved through consolidating offline centers with franchise partners and recommitting to its core online learning offerings. The company also completed a successful employee stock buyback valued at ₹500 million, with a substantial participation rate from former employees.

Unacademy has secured approximately $854.3 million through 13 funding rounds, with prominent investors such as SoftBank, Tiger Global, General Atlantic, and Peak XV Partners backing the company.

The evolving landscape of India’s edtech sector has witnessed notable transformations. Byju’s, a former industry leader, has seen a significant decline in valuation and is currently undergoing insolvency proceedings. In contrast, Physics Wallah, once considered an underdog, has achieved profitability and continues to expand, making a successful debut in the public markets.

In recent times, Munjal has been actively involved in Airlearn, an AI-driven language-learning app that adopts a gamified approach similar to Duolingo. While this shift has garnered traction in markets like the US, UK, Germany, and Canada, it has also sparked concerns among some Unacademy investors, who feel that the core edtech business is being neglected during a challenging phase.

Munjal remains optimistic about Airlearn’s potential and believes that artificial intelligence holds the key to unlocking a new wave of innovation in educational technology.